1. What is the Monthly Total Cost Calculation?

The Monthly Total Cost calculation determines the actual monthly cost to an employer for an employee in the UK for the 2025-26 tax year, including salary, National Insurance contributions, and pension contributions.

2. How Does the Calculator Work?

The calculator uses the following equation:

Where:

• \( \text{Gross Pay} \) — Annual salary before deductions (GBP)
• \( \text{Employer NI} \) — Employer National Insurance contributions (GBP)
• \( \text{Employer Pension Contributions} \) — Employer pension contributions (GBP)

Explanation: The calculation converts the total annual employment costs into a monthly figure by dividing by 12.

3. Importance of Employer Cost Calculation

Details: Understanding the full cost of employment is crucial for budgeting, financial planning, and comparing employment costs across different compensation structures.

4. Using the Calculator

Tips: Enter gross annual salary, employer NI contributions, and employer pension contributions in GBP. All values must be valid (positive numbers).

5. Frequently Asked Questions (FAQ)

Q1: What's included in employer costs?
A: The main components are gross salary, employer National Insurance, and mandatory pension contributions under auto-enrollment.

Q2: How is Employer NI calculated?
A: For 2025-26, Employer NI is typically 13.8% on earnings above the Secondary Threshold (£9,100 per year).

Q3: What about other employment costs?
A: This calculator focuses on core costs. Additional costs may include benefits, training, equipment, and workspace.

Q4: Does this include employee deductions?
A: No, this calculates the employer's costs only. Employee deductions (income tax, employee NI, etc.) don't affect the employer's costs.

Q5: Is this calculator specific to UK?
A: Yes, it uses UK-specific calculations for National Insurance and pension requirements for the 2025-26 tax year.